<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
/X/ EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED 9/30/95
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
/ / EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
-------- --------
Commission file number 000-22996
---------
GILMAN & CIOCIA, INC.
---------------------
(Name of small business issuer in its charter)
Delaware 11-2587324
- ------------------------- -------------------------
(State of jurisdiction ( I.R.S. Employer
of incorporation or Identification No.)
organization)
475 Northern Boulevard, Great Neck, NY 11021
- -------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(516) 482-4860
----------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months ( or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days.
Yes /X/ No / /
State the number of shares outstanding of each class of the issuer's
classes of common equity, as of the latest practicable date. As of November 9,
1995, 5,567,120 shares of the issuer's common equity were outstanding.
<PAGE> 2
PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Consolidated Balance Sheet as of September 30, 1995 and June 30, 1995 F-1 &
F-2
Consolidated Statements of Operations for the three-month
periods ended September 30, 1995 and 1994 F-3
Consolidated Statements of Stockholders' Equity for the three-month
periods ended September 30, 1995 and 1994 F-4
Consolidated Statements of Cash Flows for the three-month periods ended
September 30, 1995 and 1994 F-5 &
F-6
Notes to Consolidated Financial Statements F-7 -
F-9
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 COMPARED.
The Company's revenues for the three months ended September 30, 1995
increased 60.0% to $1,509,211 as compared to $943,306 for the three months ended
September 30, 1994. The increase in revenues for the three months ended
September 30, 1995 is primarily attributable to the opening of 22 new offices in
January 1995, the continued growth of existing offices and increased financial
planning revenues which are not confined to the Company's traditional tax return
preparation "season". The total revenues for the three months ended September
30, 1995 consist of $176,943 in Tax Preparation Services, $1,164,226 in
Financial Planning Services and $168,042 in Direct Mailing Services. Total
revenue for the three months ended September 30, 1994 consist of $103,866 in Tax
Preparation Services and $839,440 in Financial Planning Services.
The Company's operating expenses for the three months ended September 30,
1995 increased 29.8% to $1,600,649 as compared to $1,233,283 for the three
months ended September 30, 1994. The increase in the Company's operating
expenses is primarily attributable to increased rent of $95,631 and additional
salaries (including officers' salaries) and commissions of $243,338. The
increase in operating expenses is primarily due to the opening of 22 new offices
since January 1995 and the growth of
2
<PAGE> 3
existing offices. The increase in commissions is due to increased financial
planning activities.
The Company's interest income for the three months ended September 30, 1995
increased 161.8% to $39,038, from $14,909 for the three months ended September
30, 1994. The increase is primarily due to interest from outstanding
subscriptions receivable and other notes receivable. The Company's interest
expense for the three months ended September 30, 1995 decreased 55.4% to $5,138
from $11,522 for the three months ended September 30, 1994. The decrease is
primarily due to the decrease in bank obligations. The Company increased its
other income through gains from marketable securities and income from investment
in partnership.
The Company's net income before provision for income taxes for the three
months ended September 30, 1995 increased by 120.0% to $57,038 from ($285,240)
for the three months ended September 30, 1994. This increase is attributable to
the gain on investment in marketable securities of $64,663, the income from
investment in partnership of $43,334 and a decrease in th loss from operations
of $198,539 for the period.
The Company's business is highly seasonal, with the majority of its revenue
earned in the first four months of the calendar year.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had a working capital of $3,533,014
compared to working capital of $4,062,344 at June 30, 1995. The decrease in
working capital for the three months ended September 30, 1995 is primarily due
to the investment in partnership of $348,360 which was transferred from
marketable securities and the purchase of intangible assets of approximately
$141,000.
Cash used in operating activities in the Company's fiscal period consisted
primarily of an increase in accounts receivable of $134,032 and an increase in
prepaid and refundable income taxes of $112,246.
Cash provided by investing activities consists primarily of the proceeds
from the sale of Marketable Securities of $2,160,413.
Cash used in financing activities were primarily due to repayments of notes
payable to bank of $27,778 and an increase in notes receivable from stockholders
of $48,703.
3
<PAGE> 4
PART II
ITEM 6. EXHIBITS; LISTS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Registrant's Articles of Incorporation, as amended,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
3.2 Registrant's by-laws, incorporated by reference to the
like-numbered exhibit in the Registrant's Registration
Statement on Form SB-2 under the Securities Act of 1933, as
amended, File No. 33-70640-NY
4.1 Form of Class A Warrant delivered to Bridge Loan lenders,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended,File No. 33-70640-NY
4.2 Form of Class B Warrant delivered to Bridge Loan lenders,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
4.3 Form of Redeemable Warrant included in Units, incorporated by
reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70604-NY
4.4 Form of Purchase Option for Underwriter's Warrants,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70604-NY
10.1 Restated and Amended Agreement and Plan of Merger dated
December 23, 1992 among the Registrant and 15 participating
corporations, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
4
<PAGE> 5
10.2 Asset Sale Agreement dated December 31, 1992, incorporated by
reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70640-NY
10.3 Escrow letter regarding certain shares of Common Stock of the
Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.4 (Omitted)
10.5 Warrant Agreement dated October 31, 1993 between the
Registrant and the Warrant Agent, incorporated by reference to
the like-numbered exhibit in the Registrant's Registration
Statement on Form SB-2 under the Securities Act of 1933, as
amended, File No. 33-70640-NY
10.6 (Omitted)
10.7 1993 Joint Incentive and Non-Qualified Stock Option Plan of
the Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.8 (Omitted)
10.9 (Omitted)
10.10 Form of Lock-up letter executed by shareholders of the
Registrant, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.11 Term-loan Promissory Note to State Bank of Long Island,
incorporated by reference to the like-numbered exhibit in the
Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended, File No. 33-70640-NY
10.12 (Omitted)
5
<PAGE> 6
10.13 Escrow Agreement among State Bank of Long Island as escrow
agent, the Registrant and Patterson Travis, Inc., incorporated
by reference to the like-numbered exhibit in the Registrant's
Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended, File No. 33-70640-NY
10.14 Form of guarantee of Term-loan Promissory Note to State Bank
of Long Island, incorporated by reference to the like-numbered
exhibit in the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.15 Agreement among Registrant and James Ciocia, Thomas Povinelli,
Gary Besmer and Kathryn Travis regarding the repayment of
advances, incorporated by reference to the like-numbered
exhibit to the Registrant's Registration Statement on Form
SB-2 under the Securities Act of 1933, as amended, File No.
33-70640-NY
10.16 Underwriting Agreement between the Registrant and Patterson
Travis, Inc., incorporated by reference to exhibit number 1.1
in the Registrant's Registration Statement on Form SB-2 under
the Securities Act of 1933, as amended, File No. 33-70640-NY
10.17 Stock Purchase Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.1 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.18 Noncompetition Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.2 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.19 Employment Agreement dated February 10, 1995 between Steven
Gilbert Financial Corp. and Steven Gilbert, incorporated by
reference to exhibit 99.3 to the Company's Current Report on
Form 8-K, dated February 10, 1995
10.20 Registration Rights Agreement dated February 10, 1995 between
Registrant and Steven Gilbert, incorporated by reference to
exhibit 99.4 to the Company's Current Report on Form 8-K,
dated February 10, 1995
10.21 Letter Agreement dated April 26, 1995 between the Company and
Steven Gilbert, incorporated by reference to exhibit 10.20 in
the Company's quarterly report on form 10Q for the fiscal
quarter ended March 31, 1995
6
<PAGE> 7
(b) Reports on Form 8-K
No Reports on Form 8-K was filed by the Company during the quarter ended
September 30, 1995.
7
<PAGE> 8
SIGNATURE
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated: May 7, 1996
GILMAN & CIOCIA, INC.
By/s/Ralph V. Esposito
- -----------------------
Ralph V. Esposito
Chief Financial Officer
8
<PAGE> 9
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
------------- --------
1995 1995
---- ----
<S> <C> <C>
CURRENT ASSETS:
CASH & CASH EQUIVALENTS $2,779,961 $1,335,762
INVESTMENT IN MARKETABLE SECURITIES 0 2,095,750
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR
DOUBTFUL ACCOUNTS OF $23,685 AND $23,685
RESPECTIVELY 696,371 562,339
NOTES RECEIVABLE - STOCKHOLDERS,
CURRENT PORTION 50,370 44,625
OTHER RECEIVABLES - STOCKHOLDERS 179,367 180,895
NOTES RECEIVABLE -
FORMER STOCKHOLDER - CURRENT PORTION 4,403 4,242
PREPAID AND REFUNDABLE INCOME TAXES 230,833 118,589
PREPAID AND OTHER CURRENT ASSETS 72,508 127,652
---------- ----------
TOTAL CURRENT ASSETS 4,013,813 4,469,854
---------- ----------
PROPERTY AND EQUIPMENT - NET OF ACCUMULATED
DEPRECIATION AND AMORTIZATION OF $664,378
AND $617,768 RESPECTIVELY 918,077 926,967
---------- ----------
OTHER ASSETS;
NOTE RECEIVABLE - STOCKHOLDERS
NET OF CURRENT PORTION 115,527 72,569
NOTES RECEIVABLE - FORMER STOCKHOLDER,
NET OF CURRENT PORTION 21,949 23,143
INTANGIBLE ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $41,270 AND $20,467
RESPECTIVELY 611,608 471,561
INVESTMENT IN SUBSIDIARY 0 20,000
SECURITY DEPOSITS 139,304 109,366
INVESTMENT IN PARTNERSHIP 391,694 0
---------- ----------
TOTAL OTHER ASSETS 1,280,082 696,639
---------- ----------
TOTAL ASSETS $6,211,972 $6,093,460
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
<PAGE> 10
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
------------- --------
1995 1995
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 52,572 $ 34,248
NOTES PAYABLE - BANK, CURRENT PORTION 216,667 216,667
NOTES PAYABLE - OTHER, CURRENT PORTION 21,807 21,807
ACCRUED PAYROLL AND PAYROLL TAXES 146,123 38,979
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 43,630 95,809
---------- ----------
TOTAL CURRENT LIABILITIES 480,799 407,510
---------- ----------
LONG - TERM DEBT:
NOTE PAYABLE - BANK, NET OF CURRENT PORTION 138,889 166,667
NOTE PAYABLE - OTHER, NET OF CURRENT PORTION 28,193 28,193
---------- ----------
TOTAL LONG TERM DEBT 167,082 194,860
---------- ----------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK - $.001 PAR VALUE
AUTHORIZED - 100,000 SHARES
ISSUED -- NONE
COMMON STOCK - $.01 PAR VALUE
AUTHORIZED - 9,000,000 SHARES
ISSUED - 5,636,293 & 5,634,864 SHARES RESPECTIVELY 56,362 56,348
PAID-IN CAPITAL - COMMON STOCK 5,772,562 5,767,039
PAID-IN-CAPITAL - WARRANTS AND OPTIONS 48,155 48,155
RETAINED EARNINGS 850,189 805,403
---------- ----------
6,727,268 6,676,945
LESS: STOCK SUBSCRIPTIONS AND ACCRUED INTEREST
RECEIVABLE 751,302 773,980
TREASURY STOCK-AT COST-116,964 SHARES 411,875 411,875
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 5,564,091 5,491,090
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $6,211,972 $6,093,460
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
<PAGE> 11
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------
1995 1994
---- ----
<S> <C> <C>
NET REVENUES $ 1,509,211 $ 943,306
OPERATING EXPENSES:
SALARIES AND COMMISSIONS 856,582 613,244
ADVERTISING 15,306 13,706
RENT 281,267 185,636
DEPRECIATION AND AMORTIZATION 73,563 47,855
GENERAL AND ADMINISTRATIVE EXPENSES 498,931 372,842
EXPENSE REIMBURSEMENT FOR FINANCIAL PLANNING (125,000) 0
----------- -----------
TOTAL OPERATING EXPENSES 1,600,649 1,233,283
----------- -----------
LOSS FROM OPERATIONS (91,438) (289,977)
----------- -----------
OTHER INCOME (EXPENSES):
INTEREST INCOME 39,038 14,909
INTEREST EXPENSE (5,138) (11,522)
RENT INCOME 6,579 1,350
INCOME FROM INVESTMENT IN PARTNERSHIP 43,334 0
GAIN ON SALE OF MARKETABLE SECURITIES 64,663 0
----------- -----------
TOTAL OTHER INCOME 148,476 4,737
----------- -----------
INCOME BEFORE PROVISION/(CREDIT) FOR INCOME TAXES-Historical 57,038 (285,240)
PROVISION/(CREDIT) FOR INCOME TAXES-Historical 12,252 (144,066)
----------- -----------
NET INCOME/(LOSS)-Historical $ 44,786 $ (141,174)
=========== ===========
PROVISION FOR INCOME TAXES-Proforma $ 0 $ 85,877
=========== ===========
NET INCOME (LOSS)-Proforma $ 44,786 $ (227,051)
=========== ===========
EARNINGS PER SHARE:
PRIMARY Historical $ .01 $ (.03)
=========== ===========
Proforma $ .01 $ (.06)
=========== ===========
FULLY DILUTED Historical $ .01 $ (.03)
=========== ===========
Proforma $ .01 $ (.05)
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 5,635,213 4,114,465
=========== ===========
FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,874,884 4,273,158
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE> 12
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
PAID-IN
CAPITAL
COMMON STOCK WARRANTS
------------ PAID-IN AND RETAINED
SHARES AMOUNT CAPITAL OPTIONS EARNINGS
------ ------ ------- -------- --------
<S> <C> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1995
BALANCE AT JULY 1, 1995 5,634,864 $ 56,348 $5,767,039 $ 48,155 $ 805,403
COLLECTION OF COMMON STOCK SUBSCRIPTIONS AND
ACCRUED INTEREST RECEIVABLE
COMMON STOCK ISSUANCE 1,429 14 5,523
ACCRUED INTEREST ON STOCK SUBSCRIPTIONS RECEIVABLE
NET INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 44,786
BALANCE AT SEPTEMBER 30, 1995 5,636,293 $ 56,362 $5,772,562 $ 48,155 $ 850,189
========= ========== ========== ========== ==========
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1994
<S> <C> <C> <C> <C> <C>
BALANCE AT JULY 1, 1994 4,114,465 $ 41,144 $1,170,745 $ 226,080 $ 714,923
COLLECTION OF COMMON STOCK SUBSCRIPTIONS AND
ACCRUED INTEREST RECEIVABLE
S CORPORATION DIVIDEND DISTRIBUTION (202,868)
ACCRUED INTEREST ON STOCK SUBSCRIPTIONS RECEIVABLE
NET LOSS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 (141,174)
--------- ---------- ---------- ---------- ----------
BALANCE AT SEPTEMBER 30, 1994 4,114,465 $ 41,144 $1,170,745 $ 226,080 $ 370,881
========= ========== ========== ========== ==========
<CAPTION>
SUBSCRIPTIONS TOTAL
RECEIVABLE TREASURY STOCK STOCK-
AND ACCRUED -------------- HOLDERS'
INTEREST SHARES VALUE EQUITY
------------- ------ ----- -------
<S> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1995
BALANCE AT JULY 1, 1995 ($ 773,980) 116,964 $ (411,875) $5,491,090
COLLECTION OF COMMON STOCK SUBSCRIPTIONS AND
ACCRUED INTEREST RECEIVABLE 36,684 36,684
COMMON STOCK ISSUANCE 5,537
ACCRUED INTEREST ON STOCK SUBSCRIPTIONS RECEIVABLE (14,006) (14,006)
NET INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 44,786
BALANCE AT SEPTEMBER 30, 1995 $ (751,302) 116,964 $ (411,875) $5,564,091
========== ======= ========== ==========
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1994
<S> <C> <C> <C> <C>
BALANCE AT JULY 1, 1994 $ (694,148) $ 0 $ 0 $1,458,744
COLLECTION OF COMMON STOCK SUBSCRIPTIONS AND
ACCRUED INTEREST RECEIVABLE 75,146 75,146
S CORPORATION DIVIDEND DISTRIBUTION (202,868)
ACCRUED INTEREST ON STOCK SUBSCRIPTIONS RECEIVABLE (12,338) (12,338)
NET LOSS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 (141,174)
---------- ---------- ---------- ----------
BALANCE AT SEPTEMBER 30, 1994 $ (631,340) $ 0 $ 0 $1,177,510
========== ========== ========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE> 13
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $ 44,786 $ (141,174)
----------- -----------
DEPRECIATION AND AMORTIZATION 73,563 47,855
GAIN ON DISPOSAL OF PROPERTY
AND EQUIPMENT 0 8,407
COMPENSATORY ELEMENT OF COMMON STOCK ISSUANCE 5,537 0
UNREALIZED LOSS ON MARKETABLE SECURITIES 16,216 0
EXPENSE REIMBURSEMENT FOR FINANCIAL PLANNING (125,000) 0
INCREASE (DECREASE) IN CASH FLOWS AS A RESULT OF CHANGES IN ASSET AND
LIABILITY ACCOUNT BALANCES:
ACCOUNTS RECEIVABLE (134,032) 84,192
PREPAID EXPENSES 55,144 (120,178)
SECURITY DEPOSITS (29,938) 10,389
ACCOUNTS PAYABLE 18,324 (160,974)
PREPAID AND REFUNDABLE INCOME TAXES (112,246) (195,286)
ACCRUED PAYROLL AND PAYROLL TAXES 107,144 (76,102)
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (52,179) (5,469)
----------- -----------
TOTAL ADJUSTMENTS (177,467) (407,166)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (132,681) (548,340)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
ACQUISITION OF PROPERTY AND EQUIPMENT (37,431) (33,732)
PROCEEDS FROM SALE OF MARKETABLE SECURITIES 2,160,413 0
PURCHASE OF INTANGIBLE ASSETS (146,500) 0
INCREASE IN OTHER RECEIVABLES STOCKHOLDERS 1,528 (20,953)
INCREASE IN ACCRUED INTEREST (3,572) 7,783
INVESTMENT IN PARTNERSHIP (348,360) 0
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES 1,626,078 (46,902)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
RECEIPTS ON NOTE FROM FORMER STOCKHOLDERS 1,033 1,230
NOTES RECEIVABLE - STOCKHOLDERS (48,703) 0
REPAYMENTS UNDER NOTES PAYABLE FROM BANK (27,778) (41,667)
INCURRENCE OF DEFERRED REGISTRATION COSTS 0 (25,811)
COMMON STOCK SUBSCRIPTIONS COLLECTED 26,250 55,023
INCREASE IN NOTE PAYABLE - OFFICER 0 (62,150)
S CORPORATION DIVIDEND DISTRIBUTIONS 0 (127,868)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (49,198) (201,243)
----------- -----------
NET INCREASE (DECREASE) IN CASH 1,444,199 (796,485)
CASH AT BEGINNING OF PERIOD 1,335,762 1,176,425
----------- -----------
CASH AT END OF PERIOD $ 2,779,961 $ 379,940
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE> 14
GILMAN + CIOCIA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------
1995 1994
------------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAYMENTS FOR THE PERIOD:
INTEREST $ 5,137 $11,522
======== =======
INCOME TAXES $122,034 $32,704
======== =======
NON CASH TRANSACTIONS FOR THE PERIOD:
ISSUANCE OF COMMON STOCK AS COMPENSATION FOR
SERVICES RENDERED $ 5,537 $ 0
======== =======
INCOME FROM INVESTMENT IN PARTNERSHIP $ 43,334 $ 0
======== =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE> 15
GILMAN + CIOCIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
NOTE 1 - PREPARATION OF FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated
balance sheet as at September 30,1995, and the related unaudited consolidated
statements of operations, stockholders' equity and cash flows for the three
months ended September 30, 1995 and 1994 include all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the financial
position as at September 30, 1995 and the results of operations, changes in
stockholders' equity and cash flows for the three months ended September 30,
1995 and 1994.
The accompanying consolidated balance sheet as at June 30, 1995 is
presented herein as unaudited. Such consolidated balance sheet was prepared from
the audited year end June 30, 1995 financial statements, and does not reflect
all disclosures and footnotes contained therein. These footnotes should be read
in conjunction with the audited financial statements for the year ended June
30, 1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation:
The consolidated financial statements include the accounts of
Gilman + Ciocia, Inc. (The Parent), (a Delaware Corporation) and its
wholly-owned subsidiaries, JT Securities, Inc. (New York), BT Telemarketing,
Inc. (New York) and Gilbert Financial Services, Inc. (Florida), and its
partially owned subsidiary, Mid Wood Tax Service, Inc. (See Note 3). All
significant intercompany transactions have been eliminated in consolidation.
(b) Per Share Data:
Primary and Fully Diluted net income per share of common stock for
the three months ended September 30, 1995 and 1994 have been computed based on
the weighted average number of common shares outstanding including common stock
that may be subject to recision. The acquisition of Gilbert Financial Services,
Inc., accounted for as a pooling of interests, has been retroactively reflected
as of the beginning of all periods presented.
(c) Investment in ATM Partners
The Company is using the equity method to account for its 35.88%
ownership in ATM Partners. The Partnership was formed in July, 1995. The
F-7
<PAGE> 16
Partnership reflects its investment at fair market value.
The condensed balance sheet of ATM Partners at September 30, 1995 is as
follows:
<TABLE>
<CAPTION>
<S> <C>
Investment in Marketable Securities $1,091,678
==========
Partners Capital $1,091,678
==========
</TABLE>
Income of the Partnership for the three months ended September 30, 1995
amounted to $120,654. The Company's prorata share amounted to $43,334.
(d) Expense Reimbursement for Financial Planning
As per an agreement between the Company and a manager, the manager
is required to reimburse the Company for certain expenses incurred on behalf of
the Company should he fail to achieve certain gross revenue criteria. Based on
these criteria the Company is entitled to be reimbursed for $125,000 of these
expenses. The Company will offset the managers future earnings to collect this
reimbursement.
NOTE 3 - MERGERS AND ACQUISITIONS
On September 18, 1995 the Company acquired seventy-five percent of the
outstanding stock of Midwood Tax Service Inc. ("Midwood"). Previously the
Company and Midwood were engaged in a joint-venture. The Company has accounted
for the acquisition as an investment in a subsidiary using the equity method.
Midwood's results of operations for the three months ended September
30, 1995 have been included in the financial statements presented herein. Due to
the immateriality of Midwood's results of operations for the period and the
minority interest in the equity of Midwood, the Company has presented Midwood
herein as if it were a wholly owned subsidiary.
NOTE 4 - SEGMENT REPORTING (UNAUDITED)
The Company is a service business which operates primarily in two
segments; Tax Preparation Services and Financial Planning Services.
(a) Tax Preparation Services
The Company is engaged in providing tax return preparation, filing and
related services to the general public. This segment of the Company's business
is seasonal and generates most of its revenues between February and April.
(b) Financial Planning Services
The Company provides financial services such as insurance, investments,
pensions and estate planning to its existing clients.
F-8
<PAGE> 17
Financial information pertaining to the above segments are as follows:
For the three months ended September 30, 1995
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Other Consolidated
<S> <C> <C> <C> <C>
Revenues $ 176,943 $1,164,226 $168,042 $1,509,211
Direct Costs $ 961,977 $ 488,210 $150,462 $1,600,649
------------------------------------------------------------------------
Operating Profit(loss) $ (785,034) $ 676,016 $ 17,580 $ (91,438)
========================================================================
Identifiable assets $5,009,065 $1,060,936 $141,971 $6,211,972
========================================================================
</TABLE>
For the three months ended September 30, 1994
<TABLE>
<CAPTION>
Tax Prep. Financial Planning Consolidated
<S> <C> <C> <C>
Revenues $ 103,866 $ 839,440 $ 943,306
Direct Costs $ 826,184 $ 407,099 $1,233,283
--------------------------------------------------------
Operating Profit(loss) $ (722,318) $ 432,341 $ (289,977)
========================================================
Identifiable assets $1,689,292 $ 280,106 $1,969,398
========================================================
</TABLE>
The Company has allocated advertising, rent and other expenses based upon
managements best estimates. The allocation of salaries has been based on the
specific service provided by the employee, except for administrative costs which
have been allocated based upon managements best estimates.
NOTE 5 - REFERENCE TO THE JUNE 30, 1995 AUDITED FINANCIAL STATEMENTS
See the Company's notes to the financial statements included in the annual
report on Form 10-KSB for the fiscal year ended June 30, 1995 for disclosures of
significant accounting policies and other pertinent disclosures which have not
materially changed.
F-9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1995
<PERIOD-END> SEP-30-1995 SEP-30-1994
<CASH> 2,779,961 1,335,762
<SECURITIES> 0 2,095,750
<RECEIVABLES> 720,056 586,024
<ALLOWANCES> (23,685) (23,685)
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,013,813 4,469,854
<PP&E> 1,582,455 1,544,735
<DEPRECIATION> (664,378) (617,768)
<TOTAL-ASSETS> 6,211,972 6,093,460
<CURRENT-LIABILITIES> 480,799 407,510
<BONDS> 0 0
0 0
0 0
<COMMON> 56,362 56,348
<OTHER-SE> 5,507,729 5,434,742
<TOTAL-LIABILITY-AND-EQUITY> 6,211,972 6,093,460
<SALES> 1,509,211 943,306
<TOTAL-REVENUES> 1,509,211 943,306
<CGS> 0 0
<TOTAL-COSTS> 1,600,649 1,233,283
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,138 11,522
<INCOME-PRETAX> 57,038 (285,240)
<INCOME-TAX> 12,252 (144,066)
<INCOME-CONTINUING> 44,786 (141,174)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 44,786 (141,174)
<EPS-PRIMARY> (.01) (.03)
<EPS-DILUTED> (.01) (.03)
</TABLE>
